Pre-foreclosures

What is pre-foreclosure?A property is considered to be in pre-foreclosure when the owner is late with at least one payment and has received notification from the lender. The entire matter is still not considered legal, though, until a Notice of Default is filed at approximately day 90. Until a property is legally foreclosed, there is a window of opportunity for savvy buyers to make a deal with the owner and/or lender.

Advantages to purchasing a pre-foreclosure- Motivated sellers who want to move on without a strike on their credit record may accept an offer that is much lower than you think, depending on how much they still owe on the mortgage.- There is more time to inspect the property than is the case with auctions. Also, utilities will still be on so a complete inspection will not be impeded.- Unlike auctions and REOs where prospective buyers frequently are required to put down more cash, or even pay for the property entirely upfront in cash, pre-foreclosure properties are typically owned by individuals who can be more flexible at times than banks and other institutions.- There may be less competition for pre-foreclosure properties than will be the case at auctions.

Locating pre-foreclosuresFinding the perfect pre-foreclosure opportunity is a bit of a grab bag, but with the right attitude and due diligence, there are definitely deals to be gotten. Consider the following sources when trying to locate a pre-closure:

- Public records and legal notices. Nearly everything connected to foreclosures is a matter of public record, including the Notice of Default and auction notice, making searching for them much easier. Prospective buyers should also keep an eye on divorce, bankruptcy and probate filings, since many of these are tied to foreclosures.- Public services. Online sites -- including foreclosures.com, realtytrac.com, foreclosure.com and foreclosure.net -- can save time and energy by providing you with the information you need. While there is a small fee (foreclosures.com charges a $49.95 monthly fee that can be cancelled anytime after a free, seven-day trial period), this can often be the easiest way to locate a foreclosed property that fits your needs. One word of caution: restricting your search to one or two areas that are near enough by for you to check out in person and with which you are familiar will go a long way in making a wise purchase.- Networking and referrals. If you have several sets of eyes looking out for a pre-foreclosure opportunity, you stand a better chance of achieving your goal to purchase one. It's especially important to contact anyone who might have inside knowledge of your desired area, including residents, service people, postal workers, and more; ask them to let you know when properties in a particular neighborhood are starting to show neglect, since this is often one of the signs of a property being in or near foreclosure. Offering to pay a finder's fee can also help in your search.

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Since every state has different foreclosure law, be sure to check the area where you're purchasing so as not to encounter any unexpected surprises. Florida is a mortgage state with a judicial process, both of which are explained below.